Case Study In 2016, in a Federal Reserve publication, Federal Reserve Bank President of San Francisco President John Wil

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Case Study In 2016 In A Federal Reserve Publication Federal Reserve Bank President Of San Francisco President John Wil 1 (57.7 KiB) Viewed 39 times

Case Study In 2016, in a Federal Reserve publication, Federal Reserve Bank President of San Francisco President John Williams wrote that one way to prepare for a future of chronically low real interest rates would be for "central banks to pursue a somewhat higher inflation target. This would imply a higher average level of interest rates and thereby give monetary policy more room to maneuver." Required Questions: a. Why would a higher inflation target result in a higher average level of interest rates? b. What does Williams mean by writing that higher interest rates would give monetary policy “more room to maneuver"? c. Are there any reasons that central banks raising their inflation targets might be a bad idea? Briefly explain